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Financial Statements Help!

CudeyCudey Well-KnownRegistered Posts: 138
Hi all.

I'm preparing for my Statements exam on Thursday and am currently hitting my head on the wall with a Statements question on one of the mocks. It's the 2013 sample 1 paper question 1.6

I've got every figure right except the retained earnings figure.

There's 3 parts to the working.

First is the parents retained earnings which is 370.

Then you have the subsidiaries and the inter-company. This is where I think I'm going wrong. I've worked the provision for unrealized profit to be 4.

I got the figure to be 352 being, but the answer is 408?

Any help would be very much appreciated. Thanks all.

Comments

  • Pearce161Pearce161 Feels At Home Registered Posts: 57
    just closed this as I have the exam tonight, let me have a quick look.
  • Pearce161Pearce161 Feels At Home Registered Posts: 57
    The retained earnings is calculated as:
    Beacon Ltd - 370 - taken from SToFP
    plus ​Hill Ltd attributable to Beacon Ltd - 42 - (retained earnings at end of period 250 - retained earnings at start of period 190 x 70% controlling share)
    Less Inter co. adjustment - (4) - (this is the unrealised profit from the inter company sale, which had £20,000 profit but still hold 1/5 of the inventory)

    = 408

    hope this helps.
  • CudeyCudey Well-Known Registered Posts: 138
    Fantastic! Thanks for the quick response. I used 60 for the inter company instead of the 4. and got the percentage the wrong way round. Stupid mistake.

    All the best for your exam tonight!
  • Pearce161Pearce161 Feels At Home Registered Posts: 57
    No problem,
    thanks and good luck for Thursday!
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